Customer complaints have zero ROI

Internet Retailing

13th Feb 2018

By Dennis Price

Customer complaints are rarely useful.

With a few rare exceptions, of course. If it is something that leads you to discover something –  employee fraud or whatever – then it is obviously useful.

In high-value, low volume products – such as an airline providing feedback to Boeing – there may also be some value.

But in the everyday, typical retail environment, I would go so far as to say that dealing with customer complaints produces negative ROI – worse than zero.

If the complaint is about the product or the experience (a drink is too cold, or a service is too late or too expensive) then they are merely providing subjective feedback on a sample of one.

Consider these two questions in your retail environment:

1.       What do customers usually complain about?
2.       Do you already know that those are the types of things that go wrong?

Even the most ‘average’ retailer would know what the typical complaints are: too slow, too expensive, too late, not enough this, too much of that etc.

Setting aside the fact that a particular customer had a particular experience might be ‘news’; the type of problem is rarely something new that surprises a retail operator.

If you know what types of problems you typically have, surely you are addressing those and these problems should not be happening routinely?

That is, you should be working on systematising those out of your business anyway – with or without complaints. And the system should work well enough that it doesn’t need to rely on the end experience alone to send a warning signal. A good system will tell you before the customer has the bad experience. In fact, the whole ‘quality control’ industry exists for that very reason.

Customers rarely know your business well enough to make constructive complaints. Airing a complaint is usually, simply an emotional reaction for a customer; and they do this in a range of ways from decent human being to being a total a**hole.

It is almost impossible for the average retail employee to really handle a psychological issue that masquerades as a complaint.

For example: a customer rocks up at a coffee shop five minutes before close. The kitchen has been closed for half an hour. They complain loudly, and freely give you advice on how you should be running your business. They sincerely believe that you should stay open as long as it takes, until they have the opportunity to ‘gift’ you the $2.00 margin you are going to make on their purchase. They don’t understand the cost of doing business, the process of running (and cleaning) the kitchen, the legalities of awards, overtime or even, heaven forbid, extended trade charges from the shopping centre. They certainly don’t appreciate that you are still going to be in the shop for at least another hour-and-half. And that the two bucks just does not cover it.

Focusing on customer complaints can have a range of negative impacts:

(a) They are a distraction from fixing the real issues

(b) It takes a disproportionate amount of time that adversely affects productivity

(c) It breeds customers who feel entitled to complain

(d) It often leads to a blaming culture developing amongst employees

There are still consultants out there who will tell you that the ‘customer is always right’. In the early days, my view was that they may not be always right but act as if they do. And I would usually add that taking money off the nastiest customers is even more satisfying. But I have come to know better.

Of course, I know the ‘lifetime value of the customer’; but that idea works a lot better on paper than it does in practice.

Now, my advice is: thank them and do the minimum to shut them up and move them on, including giving their money back if necessary, and if push comes to shove, then – just shove.

Treat a complaining customer much like that friend with too many drinks under the belt who feels compelled to provide unsolicited advice, like how Bitcoin is where the action is – even if he does not understand the difference between blockchain and a blocked drain.

Dennis Price: Co-Founder at ganador.com.au and yearone.solutions – can be reached on 0411030436.